London v. Municipal Property Assessment Corporation, 2018 CanLII 116162

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

November 30, 2018

FILE NO.:

WR 153344

Assessed Person(s):

Joan MacLaughlin London

Appellant(s):

Joan London

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 07

Respondent(s):

Township of Algonquin Highlands

Property Location(s):

1190 McComb Point Drive

Municipality(ies):

Township of Algonquin Highlands

Roll Number(s):

4621-010-000-78500-0000

Appeal Number(s):

3255576 and 3292947 (deemed 2018 appeal)

Taxation Year(s):

2017 and 2018(deemed appeal)

Hearing Event No.

697374

Legislative Authority:

Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard:

April 30, 2018 by telephone conference call

APPEARANCES:

Parties

Representative

Joan London

John London

MPAC

Darren Burns

Township of Algonquin Highlands

No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property located at 1190 McComb Point Drive (the “subject property”). has a current value assessment of $574,000 for the 2017 taxation year. The Appellant, Joan MacLaughlin London, was represented at the hearing by her Son, John London. Mr. London has spent many summers at the subject property and was able to speak authoritatively about its details. Mr. London believes the assessment returned for 2017 is too high and that the correct current value is in the range of $484,000.

2The Assessment Review Board (the “Board”) must decide two things in these appeals. Firstly, the current value of the subject property must be determined. Having reference to the assessments of similar properties in the vicinity, the Board must also determine if the current value found needs to be reduced for the purpose of achieving equitable assessment.

3Section 40.(26) of the Assessment Act, (the “Act”) states that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board did not dispose of the 2017 appeal before March 31, 2018. For that reason, this decision also applies to the 2018 taxation year.

DECISION

4The Board finds the current value of the subject property is $574,000. There is no evidence to support a reduction in this amount for the purposes of equitable assessment.

5Accordingly, the assessment of 1190 McCoomb Point Drive for the 2017 and deemed 2018 taxation years is confirmed at $574,000, in the Residential property class.

LEGISLATION

6In making its determination of these appeals, the Board must consider the relevant sections of the Act.

7Section 1 of the Act states:

“current value” means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.

8Section 19.(1) of the Act states:

19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.

9Section 44.(3) of the Act states:

44.(3) Same, 2009 and subsequent years. – For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.

What is the Current Value of the Subject Property?

MPAC’s Evidence and Position

10MPAC applied the Direct Comparison approach to value, whereby the characteristics of comparable properties are used to make adjustments to arrive at a likely sale value for the property under appeal. In this case MPAC considered the sales of five properties in the area that they deemed to be suitably comparable to the subject property for the purpose of determining its current vale for the January 1, 20916 valuation day.

11MPAC’s Property Valuation Analyst testified that the five comparable properties were selected for the study, with the following criteria:

• Sales in either 2015 or 2016 (within 12 months of the valuation day);

• Fronting on the same body of water as the subject property;

• Similar quality class of the subject property;

• Similarity of dwelling size and lot size when compared to the subject property.

12MPAC submitted that two of the properties were clearly inferior to the subject property and that two properties were clearly superior to the subject property. The fifth property, 1127 Wolf Close, was considered by MPAC to be relatively comparable to the subject property. The lowest value of the two superior properties was 4518 Kawagama Lake Road. It sold for $634,750 in August of 2015. The highest value of the inferior properties was 1295 Wolf Close. It sold for $355,000, also in August 2015. The range indicated by the lowest value superior property and the highest value inferior property is $355,000 to $634,750.

13The fifth property at 1127 Wolf Close falls within this range and also presents a set of characteristics that can be compared to the subject property:

Subject Property – 1190 McComb Point Drive

1127 Wolf Close

Water frontage

160 Feet / 0.73 Acres

100 Feet

Dwelling size (sq. ft.)

1,445

1,732

Basement Area / Area finished

211 / 0

750 / 0

Year Built

1975

1975

Quality Rating

5

5.5

Other

N/A

311 Sq. Ft. Detached Garage

Sale Price / Date

N/A

$575,000

14Finally, MPAC submitted that by making reasonable adjustments between these two properties, the returned value of the subject property of $574,000 should be considered reasonable and therefore correct.

Appellant’s Evidence and Position

15The Appellant submitted that MPAC’s evidence was not determinative of the current value of the subject property. He further submitted that the best evidence of current value for the subject property is more appropriately determined by considering the following:

• the assessments of neighbouring properties at 1182 McComb Point Drive and 1192 McComb Point Drive;

• The 2013 sale of 1182 McComb Point Drive; and

• The average assessment increase of properties in Haliburton County and the Kawagama Lake area should be applied to the subject property for the period between the 2012 current value assessment and the 2016 current value assessment.

161182 McComb Point Drive was built approximately 15 years ago. According to the Appellant, this property is superior to the subject property. It sold for $600,000 in 2013. For the 2016 current value assessment, MPAC returned an assessed value of $732,000.

171192 McComb Point Drive was built at around the same time as the subject property. Mr. London testified that it belongs to his cousin. He submitted that 1192 McComb Point Drive has a smaller main dwelling, but includes a separate, secondary bunk house building, which the subject property does not. Mr. London submitted that the differences in 1192 and 1190 McComb Point Drive cancel one another out so that it would be reasonable that their current value should be more or less the same. 1192 McComb Point Drive had a 2016 assessment of $558,000, subsequently reduced to $518,000 through the Request for Reconsideration process.

18Lastly, the Appellant submitted that properties in Haliburton County have risen in assessment from 2012 to 2016 at a rate of 8%. For properties on Kawagama Lake the increase over the same period is 6%. The current value assessment returned for the subject property represents an increase of approximately 25% over the same time, so the assessment returned cannot be correct as suggested by MPAC.

Board’s Analysis

19The Act defines current value as the amount a property would sell for on the valuation day. This means the Board must determine current value based on sales. When a sale of the subject property has not occurred on or near the valuation day, the sales of other properties that are comparable to the subject property may be used to determine a reasonable value of the subject property by making adjustments to variables between those comparable properties and the subject property.

20In this case, there was no sale of the subject property to rely on. MPAC selected five properties that sold in either 2015 or 2016. These five properties sold for between $337,000 and $634,750. Each had a number of characteristics that varied from the characteristics of the subject property.

21MPAC’s five proposed comparable properties all have frontage on Kawagama Lake. They all were sold in either 2015 or 2016, within 12 months of the statutory valuation day. The Board disregards properties 4 and 5 from MPAC. These two properties have dwellings that are 644 square feet and 787 square feet respectively. The Board finds that neither of these are suitably comparable to the subject property which has a dwelling of 1,445 square feet.

22The Board also disregards properties 1 and 2 from MPAC. Property 1 is 14 years newer than the subject property and has a quality of construction rating of 6. It has a slightly larger lot and has a full basement with 696 square feet finished. The subject property has only a small, 211 square foot, unfinished basement that is used strictly for utility purposes.

23Property 2 also has a quality rating of 6, whereas the subject property has a quality rating of 5. Property 2 has a full basement, with 910 square feet finished.

24The Board finds that properties 1 and 2 are not suitable comparable to the subject property for the purposes of determining the current value of the subject property.

25The Board is left with two properties to use for comparison; one from MPAC and the second from the Appellant. Property 3 from MPAC is located at 1127 Wolf Close. It has a smaller lake frontage than the subject property, with a larger dwelling and a detached garage. Property 3 has a 5.5 quality of construction rating and a larger basement than the subject property that is also unfinished.

26The Appellant advanced the property at 1182 McComb Point Drive which is next door to the subject property and which was constructed at about the same time. The Appellant has personal knowledge of this property and submitted that it was a good comparison because of its similarity in size and location. However, 1182 McComb Point Drive has been upgraded over the years and is now a four season dwelling, whereas the subject property is not winterized. Without making any specific accounting for the differences between 1182 McComb Point Drive and the subject property, the Appellant submitted that a current value of $484,000 is reasonable when compared to the 1182 McComb Point Drive assessment of $739,000.

27There is no market data in evidence to support either the Appellant’s opinion of current value or the assessment of 1182 McComb Point Drive. Accordingly, the Board disregards 1182 McComb Point Drive as it does not provide sale value information that can be used to assist in determining the current value of the subject property.

28The Appellant submitted that properties on different parts of the lake have different attributes and ought to be valued differently as a result. However, there was no specific evidence at the hearing to support this thesis. The sales information provided by MPAC showed details for properties in various locations and did not demonstrate any variation in value based on location.

29The Board also disregards Mr. London’s arguments with regard to ‘overall market shift’ in the years from 2012 through 2016. Without the necessary details of the vast number of properties cited, the Board has no way of using these assessment increases to make any determination of the value of the subject property. To apply a broad market increase, no matter how it is derived (by municipality, sub market or other non-specific category) would be to ignore the characteristics and attributes of the property under appeal. These broad percentage changes do not assist the Board in answering the question: ”What would the subject property have sold for on the valuation day?”

30The Board finds that the best evidence of current value of the subject property is MPACs Sale 3 at 1127 Wolf Close. The differences between the two dwellings and the presence of the detached garage on the Wolf Close property serve to offset the difference in value of the larger waterfront at the subject property. In short, 1127 Wolf Close has superior buildings and the subject property has superior waterfront. A reasonable result is that the two properties would be of similar value. 1127 Wolf Close sold for $575,000, 56 days from the valuation day. Accordingly, the Board finds the returned value of the subject property of $574,000 is likely what the subject property would have sold for on January 1, 2016. It is the current value of the property.

Is a reduction in the current value necessary to achieve equitable assessment when reference is made to the assessments of similar properties in the vicinity?

31The Appellant did not make a specific submission on the question of the equity of assessing the subject property at its current value. However, in his evidence regarding current value, he introduced the concept of comparing assessments between properties and comparing those assessments to the assessment of the subject property.

32Specifically, the Appellant submitted that the assessments of the immediate neighbours at 1182 and 1192 McComb Point Drive should inform the Board as to the current, equitable, and fair assessment for the subject property. He submitted that 1192 was built at the same time by the same family and that while it and the subject property are not identical, adjustments for different elements suggest the assessment for both should be close. The assessment for 1192, for the 2016 valuation was reduced to $518,000 through negotiations with MPAC.

331182 is a superior property to the subject property as it is a four season property. It has a 2016 CVA of $732,000. The Appellant submitted that, for the subject property to be brought up to the same standard as the dwelling at 1182, an amount in excess of $400,000 would need to be spent. The source of this amount was not supported in evidence.

34The Appellant submitted that by comparing the assessments of these two properties that are in the vicinity of the subject property, an equitable assessment can be determined for the subject property.

35MPAC submitted an equity analysis that compared the assessments of 30 single family waterfront dwellings in the vicinity of the subject property. This relationship is called the Assessment to Sale Ratio (“ASR”). The ASR is a common method used by MPAC to decide if an adjustment in the current value determined is necessary for the resulting assessment to be considered equitable with the assessments of similar lands in the vicinity.

36The range of ASRs in the sample was from 0.65 to 1.499, with a mean average of 0.986. According to MPAC this indicates that, on average, similar properties in the vicinity of the subject property are assessed at 98.6 % of their time adjusted sale value, or current value.

37The Equity Analysis goes on to explain that MPAC considers ASRs of similar properties in the vicinity that fall within a range of 0.95 to 1.05, to indicate equity of assessment. The analysis also noted that the range determined by the International Association of Assessing Officers’ (“IAAO”) to indicate equity in assessment is 0.90 to 1.10.

38The Appellant did not refute the findings of MPAC’s equity analysis.

Board’s Analysis

39The concept of reducing the current value determined to make the subject property’s assessment equitable with that of similar properties in the vicinity requires the Board to change a correct assessment finding to one that is incorrect to make it fair and equitable. Adjustments for this purpose cannot therefore be made without compelling evidence to do so.

40The Appellant, who has the burden of proof on the equity of assessment question, compared the returned assessment of the subject property with the assessments of its two neighbours, with the submission that this comparison indicates an equitable assessment should be in the $484,000 range, which is indicated by the aforementioned percentage increase over the 2012 current value assessment.

41MPAC’s equity analysis indicates that, in accordance with standards set by the IAAO and MPAC, similar properties in the vicinity to the subject property are being assessed at a level close to their sale values and that no downward adjustment to the current value determined is necessary for the purposes of equitable or fair assessment.

42The Board finds that the equity analysis prepared by MPAC is the best evidence of whether or not the current value determined requires a reduction to be equitable and fair. The Board finds that no adjustment is required in this case.

CONCLUSION

43The Board finds the current value of the subject property is $574,000. There is no evidence to support a reduction in this amount for the purposes of equitable assessment.

44Accordingly, the assessment of 1190 McComb Point Drive for the 2017 and 2018 taxation years is confirmed at $574,000, in the Residential property class.